Global Market News

European Bourses Close Lower as UK Inflation Reaches Historic High


Last updated: 06/22/2022 12:43:42

12:43 PM EDT, 06/22/2022 (MT Newswires) -- European stocks fell back into the red on Wednesday, snapping a two-day winning streak, as the UK reported a 40-year inflation high, consumer confidence fell further in the eurozone and Switzerland's economic growth prospects were trimmed.

At close of trade Wednesday, the Stoxx Europe 600 was down 0.70%, London's FTSE 100 lost 0.88% and France's CAC and Germany's DAX each fell 0.81% and 1.11%, respectively. The Swiss Market Index gained 0.46%.

Britain's annual inflation accelerated to a new historic high of 9.1% in May, meeting market estimates and the highest since 1982. It is also the highest out of the Group of Seven countries. Chancellor of the Exchequer Rishi Sunak said the government was using all measures available to help lower inflation and combat soaring prices.

Daiwa Europe said it expects UK inflation to peak at 10% in October, while ING said the headline rate would touch double digits from October and would remain above 9% throughout the year.

Meanwhile, the eurozone's flash consumer confidence for June was -23.6, edging closer to the -24.5 record-low seen in April 2020 when the pandemic started.

KOF Swiss Economic Institute on Wednesday slashed its 2022 and 2023 growth estimates for Switzerland to 2.7% and 1.6%. Earlier, the institute's spring economic forecast placed 2022 GDP growth at 2.9%. The summer economic forecast also included a negative scenario that expects a global recession from Q1 2023 to last three quarters in the US, four in the eurozone and "a prolonged period of stagnation" in Switzerland.

In corporate news, Novartis (NVS) was down 0.33% on SIX Swiss after it reported European Commission approval for Tabrecta's use as a monotherapy for treating certain patients with non-small cell lung cancer. In London, the UK government extended the sale of its stake in banking giant NatWest Group (NWG) by 12 months. The stock was up 2.94% at the end of trade in London.
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